How should you look for the right franchise system?
You can use the systems assessment to examine the franchise systems you are interested in in detail. For: those people interested in setting up their own business through franchising should examine in detail whether the franchise system they are looking at fulfils all conditions for a successful business start-up.
- What legal structure has the franchisor adopted?
- Is the franchisor registered in the Commercial Register?
- When was the company founded and how long has it been using franchising?
- Is the franchisor a member of the national franchise association?
- Is the reputableness of the franchisor questioned by official groups?
- Has the management responsible in the franchise system been involved in a bankruptcy?
- How has the company’s turnover developed since its foundation?
- How many people does the franchisor employ?
- How many employees are responsible for the franchise area?
- Do the personnel and set-up of the head office correspond with the professionalism expected?
- Does the franchisor possess sufficient capital?
- Is the franchisor affiliated in some way with another company offering similar products or services?
- Does the system form the basis of the recognised franchise term?
- What steps were taken to build up the franchise system?
- What steps has the franchisor undertaken to further develop the system?
- How many franchise businesses belong to the system at home and abroad?
- How has the total number of franchise businesses changed over the last three years?
- How high is the fluctuation of franchisees and what are the reasons for this?
- What steps is the franchisor undertaking to further develop his system and to adapt to market changes?
- Have foreign systems successfully adapted to the conditions of the home market?
- Are there only pilot projects on the home market or is there already a network of franchise partners?
- What is the overall national and international turnover of the system?
- What is the average annual turnover of a franchisee business?
- What is the average turnover of a franchisee business in the first twelve months?
- Is there a specific corporate philosophy with guiding principles that shape the way the partners act and think?
- Does the system have a specific corporate culture?
- Is the system well known by the public and what reputation does it have?
- Has the system-specific know-how been put together in an understandable and practicable way?
- What subjects are covered by the systems manual and just how comprehensive is the information?
- Is it possible to look through the systems manual before signing the franchise agreement?
- What industrial property rights are owned by the franchisor and which of these are allowed to be used by the franchisees?
Rights to a Say in Certain Matters
- In what matters do the franchisees have rights to a say?
- What franchisee committees exist within the system?
- Is there an official franchisee pressure group within the system?
- Are interested parties given a list of partners in order to be able to visit existing businesses?
- Is there a computer network between the head office and its partner businesses enabling the electronic exchange of data?
- Is there a computer-based MIS available?
- Does the system have a computer-based accounts programme for invoicing?
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